By Anietie anii-bassey
American shoppers eased off their spending at the end of the year, delivering a subdued finish to the holiday season and raising fresh questions about the durability of consumer demand as the economy heads into a new year.
Retail sales were unchanged in December from the previous month, according to a report released Tuesday by the Commerce Department, after climbing a solid 0.6% in November. Economists had been expecting a modest gain of about 0.4%, making the flat reading a disappointment and a potential signal that households are becoming more cautious.
The figures, which were published more than a month late because of a 43-day government shutdown, arrive at a time when consumers are increasingly uneasy about the outlook for jobs and the possible impact of President Donald Trump’s tariffs on prices for imported goods. With inflation still a concern for many families and hiring slowing from the torrid pace seen in recent years, analysts say shoppers may be tightening their belts.
The December slowdown followed a choppy pattern in the final months of the year. Sales slipped 0.1% in October after edging up 0.1% in September, while the summer months were far stronger, with gains of 0.6% in July and August and a robust 1% increase in June.
Because the retail sales data are not adjusted for inflation, they reflect dollar spending rather than the volume of goods purchased, meaning higher prices can sometimes mask weaker demand. Even so, the December report showed declines across a wide range of store categories.
Furniture and home furnishings retailers posted losses, as did electronics and appliance stores, sectors often sensitive to shifts in consumer confidence and big-ticket purchases.
One of the few bright spots came from building materials and garden supply stores, which managed a small increase, suggesting that some homeowners continued to invest in renovations and maintenance despite broader caution.
The snapshot offers only a partial view of overall consumer activity because it excludes most service-sector spending such as travel, hotels and entertainment. The lone service category included in the report — restaurants and bars — recorded a 0.1% drop in sales, hinting that diners may also be trimming discretionary outings.
Economists are now turning their attention to a series of closely watched economic indicators scheduled for release later this week, including fresh readings on employment and inflation, to determine whether the December softness marks the start of a broader slowdown or merely a temporary pause.
The broader economic picture remains mixed. Output has been strong, with gross domestic product expanding from July through September at the fastest pace in two years, underscoring continued momentum in business investment and consumer activity earlier in the year.
At the same time, the labor market has cooled significantly. Employers have added an average of just 28,000 jobs a month since December, a sharp contrast to the post-pandemic hiring surge from 2021 through 2023, when companies were creating roughly 400,000 positions a month.
When the government releases its January employment report on Wednesday, forecasters expect to see payrolls rise by about 80,000 jobs — an improvement from December’s estimated 50,000, but still well below the levels that once defined a red-hot labor market.
Inflation will also be in focus when the next consumer price index is released Friday. Prices rose 0.3% in December, matching November’s increase. Should inflation begin to cool in coming months, economists say it could open the door for the Federal Reserve to cut its benchmark interest rate later this year, a move that would lower borrowing costs for households and businesses and potentially revive spending.
Retailers themselves are already feeling the uneven terrain. Discount-oriented chains such as Walmart have benefited from shoppers trading down in search of bargains, allowing them to lure customers away from higher-priced rivals. But many other companies are struggling to cope with softer demand, rising costs and fierce competition from online sellers.
Store closures are mounting as retailers reorganize under bankruptcy protection or shrink their footprints to concentrate on their most profitable locations. On Monday, the operator of roughly 180 Eddie Bauer stores across the United States and Canada filed for Chapter 11 protection, citing declining sales and a host of industry pressures.
Last month, the parent company of Saks Fifth Avenue said it was seeking bankruptcy protection after grappling with intensifying competition and heavy debt taken on to acquire luxury rival Neiman Marcus just over a year earlier. Shortly afterward, the company announced plans to shutter most of its Saks Off 5th discount outlets.
Amazon, meanwhile, said earlier this month that it would close nearly all of its Amazon Go and Amazon Fresh brick-and-mortar locations within days, narrowing its focus on grocery delivery and its higher-end Whole Foods Market chain.
Together, the December retail figures and the wave of restructuring across the industry underscore a consumer sector in transition — still spending, but with greater caution as households weigh job prospects, price pressures and the uncertain direction of economic policy in the months ahead.